The Strategic Analysis of Coca-cola - Case Study Example

Strategic analysis 2 Introduction Coca-cola Company is one of the most successful companies; it is the leading manufacturer, marketer and distributor of non-alcoholic beverage in the world. It owns more than 500 hundred brands including water, juice drinks, coffees, teas, sports drinks, energy drinks, diet beverage and many others. It operates in more than two hundred countries with four hundred brands. They connect to future consumer by providing high quality products. Their employees are skilled and the materials they use are of high quality (www.cocacola.com). This report will examine the company's fundamental business structure, history, products and operations. In addition to that, it will access the SWOT analysis, as well as the PSTEL analysis. It will evaluate the strengths, weakness, opportunities and threats under the SWOT analysis. On the other hand, it will access the political, social, technological and economical analysis of the Coca-Cola Company. SWOT analysis SWOT analysis will examine the strengths, weaknesses, opportunities and the threats in Coca Cola Company. The table below represents the SWOT analysis of the Coca Cola Company. SWOT Analysis made Strengths -World's leading brand -Large scale operations -Revenue growth in its segments Weaknesses -Negative publicity -Decline in cash from the operating activities -Sluggish performance Opportunities -Growing population -Acquisition of intense competition -Growing market for its products Threats -High competition -Sluggish growth of the carbonate beverage -Dependence on the bottling partners Strengths: The Company has been the most complex part of many countries' culture over a century. The recognizable branding of coca cola products is one of the company's greatest strengths; the image of its products is displayed on other goods like T-shirts and hats. In addition to that the bottling system is also strength; it allows them to conduct business on global scale and at the same time it maintains a local approach. The bottling partners are owned and operated by the independent business parties who are authorized to sell the products of the company. The coke does not have the outright ownership of its bottling network; its main source of profits is the sale of concentrate to its bottlers (Johnson, Scholes and Whittington 2008, p.208). The labour relations practices for the coca-cola company are among the best worldwide and are in a continuous motion to improve them. Coca-cola structure is one of the most greatly unionized multinational companies in the world with over thirty percent of workers belonging to unions. Its environmental practices are among the best in the planet yet they are still working to improve on them. The Coca- cola quality structure is a worldwide program involving all aspects of their business; every employee of Coca-Cola is empowered and anticipated to maintain the high standards of value in their products, relationships and processes. The company's quality system mandates in self-assessment throughout its operations, by all the business units (www.cocacola.com). This enhances the high standards of quality production of their goods. The company performs ingredient evaluation in their laboratories for example, precise analysis of fruit juices and all other ingredients sent by suppliers to the company's factory. Moreover, their processes undergo regular inspection in order to safeguard the water they are using in their production and packaging. Weaknesses: The coca cola company has recently reported some declines in unit case volumes in some countries like Indonesia and Thailand. This is due to the reduced consumer purchasing power. According to Cole (2006, p. 88), Japan is suppose to contribute to three times as much to profits. South East Asia, Latin America and Japan generate around 5% of the coke's volume but none, of them are performing to the expectation. Coca cola products have effects on the teeth, which is a significant health care issue. In addition to that, the sugar present in the coca cola products may cause health problems if continuously consumed. Another problem caused by the company's products is addiction, as taking the products daily may affect the consumer's health after some time. Opportunities: The brand recognition is very significant factor that affects the company's competitive position; Coca-Cola's brand title and name is known well worldwide. The fundamental objective over the past few has been to get the brand name to be the better known. The packaging changes have affected the sales and business positioning; the public has tended not to be affected by the new products. Furthermore, the company's bottling system allows the company to take advantage of the infinite growth opportunities worldwide. This strategy gives Coca-Cola the opportunity to service large area (www.cocacola.com). The company's new marketing platform 'Real' coca- cola has enhanced the image of the brand, especially among teens and adults worldwide through reinforcing a genuine connection to the customers and partnership of other sectors. The enhanced brand in turn has provided a better market opportunity for their products and hence the company creates enthusiasm for their business partners and retailers. They have also customized flavours and packaging styles with the brand maintaining the premium price comparative to the competitive brands (Cole 2006, p.121). Threats: The threat of new possible competitors in the carbonated soft drink industry is not substantial; however, the threat of the substitutes is an actual threat. The soft drink industry is strong, though the consumers are not totally engaged to it. The substitutes that are putting pressure on coke include coffee, tea, milk, juices and hot chocolate. Even though Coca-Cola controls more than 40 percent of the beverage market, the changing health environment for the market have a significant effect on the business. Coke has diverse into the market, thus allowing it to have important market share and offset any losses incurred as a result of fluctuations in the market The consumer buying power is another threat in the business. The rivalry between coke and Pepsi has led to a slow moving industry, where the management must continuously respond to the changing demands and attitudes of their consumers, otherwise will loose market share to the competition. Moreover, the consumers can easily switch to other beverages with very little cost and consequence (Johnson, Scholes and Whittington 2008, p. 241). Coca Cola Company and other companies face many threats in the process of strategic management. These threats would hinder the achievement of the formulated objectives. The company's management has reported two trends that would serve to shape its strategic planning related to the external environment of the company's economic. The first one is that, coke customers view the soft drinks as less expensive enjoyment; researchers suggest that consumers of low income are likely to go for soft drinks rather than hard drinks because they are cheaper. The second trend is that, Coca Cola tends to monitor the disposal income in more than two hundred countries where it sells soft drinks. According Cole (2006, p. 107), disposal income is gradually rising around the world; this means more purchase of the consumer products, especially in countries where the product purchasing has been minimal. Inflation is a crucial factor in many markets globally and it definitely affects the way the company operates. The company has to adjust the prices in order to counteract the effects of rising costs and produce adequate cash flow to maintain the production capacity (www.cocacola.com) PESTEL analysis This analysis will look into the changes in a market place due to political, economic, social and technological factors. The table below represents the PESTEL analysis PESTEL Analysis made Political Political parties control privatization Government rules and regulations control the company's results Economical Recession affects the product price ranges Rate of interests depress the business Social Growing population of women Change in lifestyle Technological New products and product improvement New marketing techniques Internet and e-commerce Political analysis: The government plays a major role in the operation and manufacturing of the products in terms of rules and regulations. The government would set fines if the company does not meet the standard of laws (Cole 2006, p.132). The political factors that can cause the Coca-Cola Company to acquire different results from the expected results include the following: Changes in non-alcoholic business environment; pricing pressures, competitive product and their ability to maintain the share of sales in the global market Changes in laws and regulations; taxation requirements and the environmental laws and domestic and foreign jurisdictions. The company's ability to penetrate developing and emerging markets; this depends on economic and political conditions, as well as how they can acquire the strategic business management. Political conditions in international market; government changes, civil unrest and restrictions on the ability to transfer capital from one border to another. Economic changes: The economic change, for instance economic recession has created increased activity at the lower ends of the product price ranges. As the rates of interests rises, the business get depressed hence causing redundancies and lower spending levels. The recent economic recession has motivated the Coca Cola Company; the company has come up with good marketing strategies and planning that would enable it to face the economic challenges, hence giving the best to the business in its totality (Cole 2006, p. 127). Its quality management has ensured that the company is well positioned hence meet the customers' needs and continue to experience strong growth through new goods and stretched distribution. Coca- cola has highlighted their operating sector to work with other partners like bottling partners in order to accomplish the price strategies that would reinforce their financial results, provide customers with choices that would satisfy their needs and deliver value for the consumers. The coca- cola company has integrated the required steps for the development of effective strategies that is responsive to the needs of the customers worldwide (www.cocacola.com). Their perfect structure reflects the way product choices is made and unifies the company's procurement and supply procession systems to increase effectiveness, get rid of redundancies and link the company's activities with those of their business partners. The challenge of increasing costs and a weak economic environment have made the Company become very popular; for instance, in the international market due to its deep knowledge of strategic planning and marketing, as well as availability of local communities that could best serve in many countries. The company's understanding of the local communities makes it retain the top position in the international market for soft drinks. Its readiness to participate on the marketing effort enhances winning over the market of the soft drink worldwide. Coca-Cola believes that the soul of their project is always the consumers. It will continue to use the quality marketing strategies in all countries in order to maintain the top position of soft drink and beverage production worldwide (Cole 2006, p. 132). Social analysis: Social changes involve the change of attitudes and lifestyles. For instance, the number of women who go out to work has increased hence leading to the need for time-saving products for the home. Many people worldwide are practicing healthier lifestyles; for this reason, the non-alcoholic beverage industry has been affected. Many people are switching to bottle water and diet colas instead of beer and other alcoholic beverages. Consumers from the age of 37 to 55 are also increasingly concerned with the nutrition. There is a significantly large population of the baby boomers, thus affecting the coca cola company by increasing the overall demand in the healthier beverages (Johnson, Scholes and Whittington 2008, p. 223). Technological analysis: Technological changes create the opportunities for new products and new marketing techniques like the internet and the e-commerce. Some technological changes that have affected the production and sales of the Coca-Cola Company include the following: The effectiveness of the company's advertising, promotion and marketing programs. For instance, the new technology of television and internet which use special effects for advertising through media. The company make some products look attractive in advertising hence promote the sales. The company has introduced the cans and bottles thus increasing their sales as it is easy to carry and bin the bottles once they have been used. Technology is getting advanced and the company has introduced new machineries that promote production and marketing. The six factories in Britain utilize the most stat-of-the-art drinks technology in order to ensure the top product quality and speedy delivery. The Wakefield factory has the best technology to produce containers of coca cola faster than bullets from a machine gun. Evaluation This study has examined the analysis of Coca-Cola Company; it has viewed the strengths, weaknesses, opportunities and the threats. Moreover the study shows the PESTEL analysis of the company; the political, economical, social and technological analysis of the company. It has also highlighted the position of the company in the worldwide market and its environmental performance and operations. Despite the changes in the business, the company has remained profitable; it has the best and exclusive marketing strategies and research operation units in many countries that will enable the company to be the most powerful marketer in soft drinks industry. According to Cole (2006, p. 125), the most fundamental concept underlying marketing is the one for human needs. Coca-Cola Company has a wide market for its products since it manufacturers and promotes beverages worldwide. According to the analysis, the Coca-Cola Company produces various packages of soft drinks in different sizes, containers and shapes designed for variety of buyers, as the taste of customer's changes with time. The company recognizes market strategies, selects the suitable, and develops products and marketing varieties modified to each as the company produces soft drinks for other segments. Conclusion Coca- Cola Company has realised that it has inadequate processes to handle the demand planning. Regarding with resource management, the Company has a minimal turnover, loyal work force and powerful affinity to promote from within the company. Generally, it provides smart compensation; it places a great emphasis on training their employees indoctrinating into the 'coke way'. For this reason, its employees worldwide will be able to share a comparable thinking and appreciation for what the product seeks to be in the minds of the consumers. In other words, the company places a lot of emphasis on winning the market competition (www.cocacola.com). To ensure the successful operation of the business, the Company has collaborated with other bottling organizations to venture into many countries with maximizing value through affordable price and volume approach. In order to develop its marketing strategies, the company has integrated its operations into a single unit. This has been done through management tools that enable the company to realize the business objectives and promote quality customer relationship. They have successfully communicated to the market status for the required development of the company in many countries since the company has produced excellent operating revenues as it continue to outpace the cola soft drinks. Its top management has promoted increase in sales and market shares with strong business presentation (Johnson, Scholes and Whittington 2008, p. 257). References Cole, M 2006, strategic management: Coca-Cola Company. Jessica Kingsley, New York. Johnson, G, Scholes, K & Whittington, R 2008, Exploring strategic change: exploring corporate strategy. Prentice Hall, London. Read More